Why New Homes Matter Even If You Don’t Buy One

If you follow real estate, you’ve heard a lot about inventory lately. That’s because, inventory – which refers to the number of homes available for sale – plays a big role in how much house the typical buyer can afford. When there are more homes for sale than there are interested buyers, home prices fall. These days, there are a lower-than-usual number of homes available to buy in many markets, which is why prices have continued to rise across the country. Of course, one good way to boost inventory is to build new homes. New home construction produces more choices for buyers and more competition among sellers, which helps balance the market. For this reason, the National Association of Home Builders regularly surveys builders to get a feel for whether they are optimistic about the market and likely to build more homes. The NAHB’s Housing Market Index scores builders answers on a scale where any number above 50 indicates more builders feel conditions are good than poor. In February, the index fell two points but remains in positive territory at 65. Granger MacDonald, NAHB’s chairman, says builders are generally optimistic. “While builders remain optimistic, we are seeing the numbers settling back into a normal range,” MacDonald said. Regionally, the Northeast and South were down, while the Midwest rose one point and the West was unchanged at 79. More here.